February 17, 2012
The decision on the second Greek bailout has been put on ice until (at least) next Monday, but things are moving fast in and around Greece these days – so here are yesterday’s five key developments in the Greek crisis:
- A new poll published by Greek magazine Epikaira confirmed that the Greek electorate is moving towards the extremes of the political spectrum. New Democracy – the centre-right party led by Antonis Samaras – is credited with 27.5% of votes, while former Greek Prime Minister George Papandreou’s PASOK lags well behind with 11%. In total, the two ‘mainstream’ parties would therefore get 38.5% of votes. The Greek Communist Party, Democratic Left and the Radical Left Coalition (SYRIZA) are credited with a combined 43.5% of votes, but the first has ruled out entering a coalition with the other two hard-left parties. These results are clearly very significant, not least because they will give Germany, Finland and the Netherlands fresh impetus to argue that Greece’s smaller parties should also provide written commitments to austerity. Unfortunately, as we point out in our latest briefing, at the moment it’s quite hard to see any of these parties agreeing to such a request;
- PASOK’s Michalis Chrysochoidis, Greek Minister for growth and competitiveness (definitely an unenviable post), told reporters in Frankfurt that his party is “in favour of an extension of the life of [Greek Prime Minister Lucas] Papademos’s government…Elections should take place by the end of the constitutional term in 2013.” Incidentally, Germany, Finland and the Netherlands reportedly brought up the possibility of postponing the Greek elections during Wednesday’s conference call of eurozone finance ministers;
- Greek President Carolos Papoulias’ anti-Schäuble invective didn’t go unnoticed in Germany. CDU MP Christian von Stetten yesterday said that, without the German Finance Minister, Greece would already have been bankrupt a long time ago. The Greek President’s intervention, he went on, was “unthinkable” and “absurd”. Most significantly, Mr von Stetten said that Papoulias’ words would “certainly impact” on the Bundestag vote on whether to approve the second Greek bailout, due on 27 February;
- According to Die Welt, the ECB has started the announced swap of its €50 billion Greek government bond holdings for new Greek bonds. The ECB is swapping the bonds at their nominal value, meaning that it is making profits out of them. These profits will then be distributed via national central banks to eurozone governments, which will have to decide whether they want to return the money to Greece as part of the second Greek bailout. The swap will be reportedly completed by 20 February. We will expand on this specific point later;
- Separately, Schäuble is also said to have rejected the idea of providing Greece with a bridge loan to avoid the country defaulting on 20 March – when Greece needs to redeem €14.5 billion worth of its debt – and uphold the rest of the second Greek bailout until after the elections as a means to maintain pressure on Athens.
Lots of stuff going on, and not all is necessarily good news. As usual, if you want to stay on top of the eurozone crisis, we recommend that you check out the €uro-Zone section of our new website and keep following us on Twitter @OpenEurope.Open Europe blog team